Although entrepreneurship is widely regarded as the panacea to eco-nomic development (Baumol 1990; Fritsch and Storey 2014), there is still a profound lack of well-coordinated support mechanisms to stimulate business enterprise in low-income and emerging economies for either political or economic reasons (Baubock 2008) especially in Africa. In cases where efforts have been channeled towards encouraging entrepreneurship at individual, institutional and national levels, results have been mixed at best (Arshed et al. 2016; Chigunta and Mwanza 2017 in Gough and Langevang 2017; Naudé 2010).
6Diaspora Networks: A Social
Capital Source for Entrepreneurship in Low-Income and Emerging Economies
A. Simba (*) Nottingham Trent University, Nottingham, UKe-mail: [email protected]
N. Ojong Tyndale University College, Toronto, Canadae-mail: [email protected]
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However, what has been clear among this confusion is that diaspora networks are progressively taking centre stage operating as a catalyst for social capital necessary for entrepreneurship to thrive (Nkongolo-Bakenda and Chrysostome 2013) especially in Africa. As much as they appear to be performing such an important role, Leblang (2010) noted their informal nature, arising from limited regulation, as one of their common features. Notwithstanding this, Wang (2000) argued that their informality complements and compensates for the weak for-mal business institutions found in emerging economies often located in the African continent. Clearly, the scant literature on diaspora net-works acknowledges that diasporas have become a major driver for entrepreneurial activity in their country of origin (COO) (Kuznetsov and Sabel 2006; Marks 2006; McDade and Spring 2005; Newland and Tanaka 2010).
In the few cases presented in the literature, diaspora networks are recorded as re-defining the business environment, particularly in low-income and emerging economies (Bhagavatula et al. 2017; Hill and Mudambi 2010; Dutia 2012). With respect to diaspora networks’ influential role in the business environments of most low-income and emerging economies, Agunias and Newland (2012) confirmed that diasporas can and, in many cases, do act as economic agents of the COO. Despite the fact that diaspora networks are sometimes dismissed as informal trade (Lucas 2001), there is certainly ground to acknow-ledge them in the mainstream economics because of their impact as highlighted above. Beyond sending remittances through diasporas, dias-pora networks promote trade and foreign direct investment (Sahoo and Patnaik 2010) through social capital embedded in their connections (Tsai and Ghoshal 1998).
Diaspora networks create businesses and stimulate entrepreneurship by facilitating new skills, information and knowledge transfers to the COO (Efendić et al. 2014; Newland and Plaza 2013; Terrazas 2010). This perhaps marks diaspora networks as a key factor influencing eco-nomic activities in most low-income and emerging economies (Davies 2012). For example, Saxenian (1999) showed that a transnational com-munity of Indian engineers facilitated the outsourcing of software devel-opment from California’s Silicon Valley to cities such as Bangalore and
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Hyderabad. In the same way, Kuznetsov and Sabel (2006) explained that well-organised Chinese and Indian diasporas are providing know-ledge, skills and financial resources to their home countries.
Notwithstanding rational evidence pointing to the diaspora networks’ effect in low-income and emerging economies, the extant literature on networks in general, and entrepreneurial networks in particular, pays little attention to such types of networks. Elo (2014) found the same and she stressed that despite the multi-faceted influence of diaspora networks, little empirical research on their effects has been conducted. Furthermore, Elo (2015) in Larimo et al. (2015) expressed that very little research has been done about the impact of diaspora networks in business studies. Inspired by this limited attention to diaspora networks in the literature, our research is one of the pioneering studies intended to bring the debate about their understated influence in low-income and emerging economies found in Africa to the limelight. The main aim of doing so is three-fold.
Firstly, our goal is to fill the void in the literature by analysing dias-pora networks in general. Based on this analysis, we offer theoretical suppositions to comprehend their core functions and particularly how they influence entrepreneurship in low-income and emerging econo-mies in the African continent. Secondly, we present a new Framework to inform policy-makers, including government and private institutions, about the essence of establishing favourable policies to harness the ben-efits diaspora networks generate in the form of social capital. Clearly, establishing a platform whereby diasporas and their networks are rec-ognised through policy development, has the potential to boost entre-preneurial activity in many low-income and emerging economies in Africa. A similar view was extended in Dutia (2012) who argued that ‘engagement with diasporas is an important strategic function in today’s networked world. To ignore and miss out on capitalising this thriving group of entrepreneurs would result in undesirable consequences for any country’s economic growth’. Thirdly, we provide useful knowledge and information about how diasporas, entrepreneurs, entrepreneu-rial firms and government institutions can take advantage of the social capital embedded (Aldrich and Zimmer 1986) in diaspora networks for their economic benefits.
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Moreover, we provide other scholars with new insights into the dias-pora networks phenomenon in low-income and emerging economies in Africa. In particular, how diaspora networks can be part of the solutions for increasing entrepreneurial activity in many of these economies. To facilitate the debate on diaspora networks, we outline the subsequent sections of this book chapter in the following way. After introdu cing the purpose of the chapter, we analyse, evaluate and synthesise rele-vant theoretical propositions on diaspora networks, social capital and entrepreneurial firms and activity. We then outline the research design. Following that we engage in a wider discussion about diaspora networks. The rationale for doing so is to bring knowledge concerning their influ-ence in low-income and emerging economies into the orthodox literature on networks (Granovetter 1992) and entrepreneurial networks (Mosey and Wright 2007). From that, we highlight our specific contributions encompassing theoretical suppositions and a new integrated Framework we considered useful to several stakeholders comprising policy-makers, entrepreneurs, business practitioners and other academics. The final section emphasises the main contributions the study makes, and the implications of our newly developed integrated Framework to the field of business management and for future research.
Theoretical Background
What are the theoretical grounds that could support the expectation of diaspora networks serving as a social capital source for entrepreneurial firms in low-income and emerging economies found in the African con-tinent? We contend that theories from the fields of economic sociology, entrepreneurship and international business contain such theoretical grounds.
Diaspora as a concept is linked to migration. In 2015, there were 244 million people living outside their country of birth (International Organisation of Migration (IOM) 2016). Diasporans refer to migrants and their descendants who maintain strong connections with the COO (Safran 1991). Diasporans tend to be key actors in diaspora net-works. These networks are regarded as ‘a tool that plays an important
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role in reducing the costs of brain-drain by fostering cooperation and the conveyance of knowledge and skills as well as collective and busi-ness investment’ (Harima 2014). The idea of setting up connections between dispersed and highly motivated entrepreneurs and their COO is a common feature of diaspora networks. Evidently, diaspora networks are of particular significance to entrepreneurial firms in low-income and emerging economies since institutions that facilitate the creation and growth of new ventures are either weak or totally missing (Nanda and Khanna 2010).
Some of the constraining factors to entrepreneurship in low-income and emerging economies located in the African continent include lack of financial resources, inadequate laws and regulations, insufficient management experience, lack of infrastructure, corruption and weak demand for products and services (Okpara and Wynn 2007). Thus, when possible, entrepreneurial firms in low-income and emerging econ-omies rely on diaspora networks to overcome some of these weaknesses (Rauch and Casella 2001). Scholars (e.g. Gillespie et al. 1999; Saxenian 2006; Agarwal et al. 2008; Foley and Kerr 2008; De Wever et al. 2005) aver the importance of diaspora networks in overcoming human, infor-mational and financial resources. Prior research often depicts diaspora networks as primarily driven by extrinsic motivations and monetary val-ues (Michelson et al. 2004; Nielsen and Riddle 2010). Yet, increasingly altruism and philanthropy are central to private and public schemes supporting entrepreneurship (Johnson 2007; Newland et al. 2010; Orozco 2006).
Granovetter (1985) highlighted the embeddedness of economic behaviour in networks of interpersonal relations. Similarly, Aldrich and Zimmer (1986) argued that entrepreneurs are embedded in social networks that play a vital role in the entrepreneurial process. Other entrepreneurship scholars stress the generic social feature of networks, showing that ties are formed within the social activity that entails cre-ating new ties as well as activating them (Ahuja 2000; Brüderl and Preisendörfer 1998). Clearly, networks involve specific relations that a person has with others (Reese and Aldrich 1995) and ties constitute the foundation of networks (Aldrich and Elam 1997). From that perspec-tive, a network could be ‘described as representing a constellation of ties
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so that, at a fundamental level, ties are the building blocks of networks’ (Jack et al. 2004: 108).
According to Granovetter (1973), the strength of ties within a network defines the strength and quality of relations and is shaped through a combination of the amount of time, emotional inten-sity, intimacy and reciprocal services involved in these relation-ships. Distinguishing between strong and weak ties Granovetter (1973) described how the heterogeneity of ties affects the activities of people in a network. He explained that acquaintances (weak ties) are less likely to be socially connected with one another while close friends (strong ties) constitute a densely knit clump of social struc-ture (Granovetter 1983). Granovetter noted that strong ties consist of regular interactions whereas weak ties consist of less frequent interac-tions between individuals in the relation. This is in line with Homans (1950: 133) who pointed out that ‘the more frequently people interact with one another, the stronger their sentiments of friendship for one another are apt to be’.
Furthermore, Granovetter (1973) and Burt (1992a) recognised that a healthy network should have both strong and weak ties since the con-figuration of these ties influences the structure and operation of net-works. In the context of diaspora networks, entrepreneurial firms in low-income and emerging economies in the African continent would benefit from the presence of strong and weak ties both in their COO and COR. However, weak ties could be perceived as holes in the social structure of networks but, interestingly, these structural holes create a competitive advantage for a person whose network spans the holes by facilitating the flow of information (Ahuja 2000; Burt 1992a). As such, the importance and opportunity of weak ties are not related to the weakness of the relationships between individuals, but lies in the likelihood of connections to other networks (Ibarra 1993). Consistent with this Granovetter (1973: 1371) explained that ‘the fewer indirect contacts one has the more encapsulated he will be in terms of know -l edge of the world beyond his own friendship circle; thus, bridging weak ties (and the consequent indirect contacts) are important in both ways’. Entrepreneurship scholars have tested these arguments. For example, Aldrich et al. (1987) pointed out that networks in which individuals
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are not well-acquainted tend to have different resources and more diverse information when compared with networks of densely knit close friends. Such contacts are likely to have different social backgrounds and access to varied resources and information in many low-income and emerging countries in Africa.
A diverse set of weak ties can lead to information, advice, financial resources, and customer and supplier referrals (Aldrich et al. 1987; Katrishen et al. 1993) as well as act as sources for opportunities and responsibilities (Bloodgood et al. 1995). Therefore, it can be argued that entrepreneurial firms in low-income and emerging economies in Africa may need heterogeneous ties with diaspora networks since such con-nections provide more opportunities for diversity in information and resources (Mönsted 1995). In relation to this, Hills et al. (1997) argued that entrepreneurs who solely interact with a small clump of densely knit friends have less possibility of obtaining important information about opportunities. Thus, regarding information relating to opportu-nities, a personal network mostly animated by strong ties is considered inefficient (Ibarra 1993). On the other hand, strong ties offer several benefits. Granovetter (1985) emphasised that information and sup-port gained through strong ties offers several benefits: it is cheap; richer, more detailed, and accurate and more importantly it often derives from a continuing relationship and so it is trustworthy.
Moreover, he added that ‘continuing economic relations often become overlaid with social content that carries strong expectations of trust and abstention from opportunism’ (Granovetter 1985: 490). Nonetheless, strong ties are regarded as less beneficial than weak ties because strong mutual relations tend to develop between people with similar features (such as age, income, education and occupation); con-sequently, strong ties are likely to provide redundant information since they can be forecasted to move in similar social circles (Burt 1992b).
Within the entrepreneurship literature scholars including Johannisson (1987), Aldrich et al. (1987), Hansen (1995) and Mönsted (1995) confirmed the value of close ties in entrepreneurship networks. In the same way, Jack (2005) noted that strong ties are instrumental in business activity and used extensively to provide information as well as maintain and enhance business and personal reputations. Furthermore,
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a survey conducted by Bruderl and Preisendorfer (1998) found that strong ties were more important than weak ties in explaining success of entrepreneurial firms as measured by firm survival. Additionally, Johannisson (1986) stressed the importance of both strong and weak ties in networks. Debating on the same subject, Starr and Macmillan (1990) expressed that a focus on strong ties may be more pertinent during the formation stage and early growth stage of an entrepreneur-ial firm when such ties are likely to be most useful as ready low-cost links to vital resources. However, their argument has generated mixed support (Hoang and Antoncic 2003). This discussion about networks, including diaspora networks can be linked to social capital.
Diaspora Networks and Social Capital
Cooke and Wills (1999) agreed that social capital may be perceived to be both the origin and the expression of successful interactions by indi-viduals in networks. This supports our main thesis that diaspora net-works may be a critical source of social capital for entrepreneurial firms in low-income and emerging economies found in the African continent. Though there are variations in terms of how social capital constructs are conceptualised and operationalised, there is a consensus among scholars that it symbolises the value embedded in the social relationships of indi-viduals or social units (Adler and Kwon 2002; Gedajlovic et al. 2013; Jack 2005). Social capital is ‘the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalised relationships of mutual acquaintance or recogni-tion’ (Bourdieu 1986: 248). In the context of entrepreneurship, social capital is perceived as ‘the good will and resources that emanate from an individual’s network of social relationships’ (De Carolis et al. 2009: 530). These socially embedded resources are vital to individuals and organisations (Baker 1990; Burt 1992a; Coleman 1988).
Scholars, including Bourdieu (1986) and Burt (1992a), acknowledged that social capital consists of both the network and the resources that may be garnered through that network. Unlike other types of capital, social capital is jointly owned by the individuals in a network, and no
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individual has exclusive ownership rights (Burt 1992a). Crucially, social capital makes possible the achievement of goals that would be impos-sible or difficult to achieve (Nahapiet and Ghoshal 1998). This perhaps explains why Moran (2005) concluded that depending on the extent to which an entrepreneurial firm influences its development and appropri-ates its value, social capital may be its most enduring source of advantage. Since entrepreneurship entails opportunity identification, evaluation and exploitation (Jack et al. 2004; Shane and Venkataraman 2000), the social capital intrinsic in networks facilitates an entrepreneur’s access to infor-mation, hence it fosters opportunity identification (Hoang and Young 2000; Tang 2010). As a result of the link between diaspora networks and entrepreneurial firms in low-income and emerging economies in Africa, the latter would benefit from critical information and advice.
Studies show that entrepreneurial firms systematically use networks to obtain ideas and gather information to recognise entrepreneurial opportunities (Hoang and Young 2000; Mosey and Wright 2007; Singh et al. 1999). Usher (2005) explained that the diasporas are increas-ingly playing an important role in developing business opportunities in several countries. As possessors of social capital embedded in dias-pora networks, entrepreneurial firms and individuals in low-income and emerging economies in Africa would get the managerial skills required to successfully exploit business opportunities.
Social capital developed between diaspora networks and entrepre-neurs in low-income and emerging economies in Africa, for example, may reduce the amount of time and investment needed to gather infor-mation (Nahapiet and Ghoshal 1998). It may also mitigate the liability of newness (Stinchcombe 1965), provide legitimacy (Aldrich and Fiol 1994), facilitate innovation (Lipparini and Sobrero 1994) and prevent failure (Miner et al. 1990; Westhead 1995). As networks are a channel of gaining access to capital including financing by venture capitalists and angel investors (Hoang and Yi 2015), entrepreneurial firms in low-income and emerging economies with the African continent, that have links to diaspora networks would benefit from these sources of finance. Diaspora networks play a critical role in enhancing or vouching for the reputation of entrepreneurial firms in low-income and emerging econo-mies (Kapur 2001) found in Africa.
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Entrepreneurship and international business scholars usually utilise Nahapiet and Ghoshal’s (1998) multi-dimensional conceptualisation of social capital. The authors view social capital in terms of its three distinct dimensions: cognitive, structural and relational. Such a mul ti-dimensional view is relevant in that it recognises and distinguishes multiple forms of social capital (Gedajlovic et al. 2013). The last two dimensions of social capital which are of relevance to our study draw on Granovetter’s (1992) structural and relational embeddedness. In rela-tion to these two dimensions, Granovetter explained that in economic exchange, ‘most behaviour is closely embedded in networks of interper-sonal relations’ (1985: 504).
His embeddedness argument clearly distinguishes and emphasises the unique roles that both ‘concrete personal relations and structures (or ‘networks’) of such relations’ play in the daily work and accomplish-ments of all kinds of economic players (Granovetter 1985: 490). A large body of scholarship has documented the structural and relational dimen-sions of social capital (e.g. De Carolis and Saparito 2006; Li et al. 2007; Liao and Welsch 2005; Newman et al. 2014; Tsai and Ghoshal 1998; Zukin and DiMaggio 1990). The structural dimension of social capital relates to the overall pattern of connections between actors particularly who you reach and the way in which you do so (Burt 1992a). Crucial to this dimension are features such as connectivity, centrality and hierar-chy, along with network ties between actors (Scott 1991; Wasserman and Faust 1994) and network configuration (Krackhardt 1989).
The literature on entrepreneurial network recognises that the struc-tural centrality for emerging entrepreneurs allows them to activate an appropriate sub-category of their total network (Larson and Starr 1993). Network ties constitute information vehicles that reduce the amount of time and investment needed to gather information (Nahapiet and Ghoshal 1998; Tang 2010), and these information ben-efits occur in three forms: access, timing and referrals (Burt 1992a). These information advantages enhance the survival, performance and growth potential of new ventures especially in low-income and emerg-ing economies (Boden and Nucci 2000; Cable and Shane 1997). Consistent with this, Liao and Welsch (2005) argued that the structural dimension of social capital basically defines the possibilities for nascent
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entrepreneurial firms’ capacity to access information, support and resources that are vital to venture creation. Network size is positively connected with the founding of new entrepreneurial firms and initial performance (Burt 1992a; Aldrich et al. 1987).
An increase in contacts develops more channels for obtaining valua-ble information and resources (Emerson 1962). Emphasising this point, Burt noted that ‘bigger is better’ but adds that ‘size is a mixed blessing’ (1992a: 16). This may mean that the entrepreneur in the low-income economy and emerging economies in Africa would have to keep his or her diaspora network to a manageable size so that contacts do not become colossal because this may be difficult to manage. Size is related to density. Here, density is measured by the extent to which an entre-preneurial firm’s contacts are interconnected, the denser the entrepre-neurial firm’s network of contacts the less likely that new resources will enter (Hoang and Yi 2015).
The relational dimension of social capital describes personal rela-tionships developed through a history of interactions with people in a social network (Granovetter 1992). It denotes the degree to which ‘an entrepreneur is actually able to receive informational, physical and emo-tional support in the venture creation process’ (Liao and Welsch 2005: 350). The key facets of the relational dimension of social capital include interpersonal trust and trustworthiness, reciprocity, overlapping iden-tities, commitment and feelings of closeness (Coleman 1990; Moran 2005). For instance, two individuals may occupy equivalent positions in similar network configurations, but if their personal relations with others in the network differ, their actions are likely to differ in numerous ways (Nahapiet and Ghoshal 1998). When trust is developed between individuals they are more willing to engage in cooperative activity through which further trust can be developed (Tyler and Kramer 1996; Fukuyama 1995). Hence, trust is the forerunner to resource acquisition and knowledge exchange (Liao and Welsch 2005) in African-oriented diaspora networks. From this perspective, an entrepreneurial firm, in a low-income or emerging economy with the African continent, that develops a higher degree of trust and trustfulness with diasporas ‘will be able to appropriate the knowledge, information and other forms of resources available’ (Liao and Welsch 2005: 350) in the network.
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This distinction between structural and relational social capital, rooted in Granovetter’s original conceptualisation of embeddedness, suggests the value of social capital as affected by more than the structure of a person’s ties and highlights a clear difference between the configura-tion of a person’s network and the quality of those relationships (Adler and Kwon 2002; Moran 2005; Nahapiet and Ghoshal 1998). ‘The fact that economic action and outcomes, like all social action and outcomes, are affected by actors’ dyadic (pair wise) relations and by the structure of the overall network of relations’ (Granovetter 1992: 33), implies that it is difficult to explain the interaction between diaspora networks and entrepreneurial firms in low-income and emerging economies in Africa without taking both dimensions into consideration.
Though the multi-dimensional view of social capital is useful, some scholars have argued that the structural and relational dimensions may better reflect the sources and resources of social capital respectively (Gedajlovic et al. 2013). Some studies have suggested that the structural dimension may be regarded as an antecedent of the relational dimen-sion (Tsai and Ghoshal 1998; Pearson et al. 2008). As such, these dimensions represent both the nature of one’s relationships and net-works (i.e. structural dimension) and the resources derived from those relationships and networks (i.e. relational dimension (Gedajlovic et al. 2013). Liao and Welsch (2005) argued that though the structural locus of an entrepreneur’s position may be necessary, it does not appear suf-ficient to have an impact on the entrepreneurial firm creation process. Unlike relational capital, structural capital does not capture accessibility which is the extent to which an entrepreneur is actually able to receive informational and emotional support in the entrepreneurial process (Liao and Welsch 2005).
Policy Development for Diaspora Networks
In many low-income and emerging economies found in Africa, insti-tutional voids often serve as a push factor’ and, in the majority of cases, force productive individuals to seek opportunities in distant lands (Massey 1998; Riddle et al. 2010). According to Dutia (2012),
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a member of a diaspora network will be more confident of utilising the ties in the COR if the COO is recognised for its political stability, established legal system, good governance practices, a well-connected infrastructure and sound financial institutions.
From this perspective, it is clear that central authorities can and should tap into the wealth, knowledge and skills of members of a diaspora network to foster the establishment and growth of busi-nesses, training centres and educational institutions (Kuznetsov 2006; Newland and Tanaka 2010). Accordingly, Mullings (2011) showed how the Jamaicans have captured the talent of their overseas diaspora members by creating institutional structures to encourage the forma-tion of knowledge and investment networks between nationals at home and national abroad. In the same way, the Kenyan government intro-duced the ‘Political Leadership Pronouncements’ and the ‘Come Home Campaign’ designed to encourage the return of Kenyans abroad to con-tribute to the development of their country (IOM 2016). This move was described in Mwagiru (2011) as Kenyan diplomacy. Cohen (2017) discussed the importance of formulating diaspora strategies at national level to harness the economic value diaspora networks have for the COO. He suggested policies geared towards formalising, managing and regulating diaspora networks as essential for economic development.
Clearly, intentionally facilitating and energising diaspora networks helps international and local businesses to extend their capacity to con-tribute economically to a country (Brinkerhoff 2012). Dutia (2012) expanded on this point claiming that by capitalising on a wider range of expert actors who are specialised in key technical and market domains that represent skillsets generally not available countries can benefit eco-nomically. Likewise, Dadush (2015) expressed that a constructive inter-action with the diaspora can be greatly enhanced by supportive policies in the COO. Diasporas play an important role in the COR and COO as they provide vital contacts and networks entrepreneurs can use to accelerate the process of setting up and expanding their own interna-tional businesses (Aliaga-Isla and Rialp 2012; Chand 2016).
Rational evidence exists in the scant literature on immigration indi-cating that engaging diasporas significantly increases economic activity in the COO (Africa Development Bank (AfDB) 2011). Drawing on the
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diaspora resources base allows varied entrepreneurial and business ven-tures to be formed and developed, thereby benefiting low-income and emerging economies in particular. However, Epstein and Heizler-Cohen (2016) were cautious about the benefits of diaspora networks. They argued that the types of networks immigrants establish may or may not increase international trade between the different countries. Anderson (1998) added that other governments have labelled their nationals in the diaspora as traitors who have adopted what he described as ‘long distance nationalism’.
Notwithstanding the above, Baubock (2008) was clear that some governments are taking the initiative, developing strategies to pro-tect their emigrant populations. In fact, many governments in Africa (e.g. Kenya, Tanzania, Zambia, Nigeria, Ghana and South Africa) have come to realise that investing in diasporas has a greater chance of yielding business operations that are more beneficial for development than non-diaspora FDI.
Diaspora investment and entrepreneurship is not so much about profit maximisation but it is often driven by social and emotional moti-vations and this makes more sense for low-income and emerging econ-omies in Africa to pay attention to diasporas and establish favourable policies. This means that diasporas can be an important source for social capital for most African countries. Clearly diaspora investments, remit-tances and know-how activities can become a part of development poli-cies in the COO (Efendić et al. 2014).
The limited literature concerning the impact of diasporas recognise that diasporas might support development programs in the COO, lobby their governments, appeal to international institutions or work to raise awareness in the broader population about contributing to national development (Efendić et al. 2014; Newland and Tanaka 2010). The role of diasporas in the COO is multi-dimensional and it includes philanthropy, voluntary and investment initiatives providing govern-ments ground for their institutionalisation in the COO (Vezzoli and Lacroix 2010). It therefore makes sense to establish policies that pro-mote their existence in many African countries.
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Research Approach
This study adopts a traditional or a narrative literature review approach (Cronin et al. 2008; Aveyard 2010). A trade-off was made with a sys-tematic literature review approach which is undertaken in line with a fixed plan, system or method (Gough et al. 2012). Utilising the princi-ples of a traditional literature review we critically appraise and analyse the existing literature on diaspora networks to emphasise its influence entrepreneurial activities from the Africa’s low-income and emerging economies perspective. In order to ground our debate, we use estab-lished networks (Granovetter 1985) and social capital (Nahapiet and Ghoshal 1998) literature. The other goal of undertaking a thorough literature review was to provide the reader with comprehensive back-ground information to understand current knowledge on diaspora networks and its associated constructs. This is consistent with Cooper (1998) who explained that a literature review is narrow funnel that is often used to introduce the new study. Clearly, from synthesising stud-ies on the diaspora networks, networks and social capital we then intro-duced an integrated Framework to inform diasporas, entrepreneurs and policy-maker’s strategic approaches in low-income and emerging econo-mies found in the African continent.
Discussions and Theory Formation
The context of low-income and emerging economies in Africa is one that is unique. In particular, the influence of social capital embedded in diaspora networks on entrepreneurial activity in low-income and emerging economies is distinctive. However, the reality about diaspora networks is far more complex and unruly than this juxtaposition sug-gests (Kuznetsov and Sabel 2006). Sahoo and Patnaik (2010) found that there is an increasing number of developing nations that have made attempts to link their diaspora through networks and alliances. This is not surprising given that globalisation has made it possible for people
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to move across the globe so freely resulting in dispersed skills and know-ledge. Indeed, the rapid increase of international immigration in devel-oped countries and its contributions to economic growth and regional development (Aliaga-Isla and Rialp 2013) merits attention.
In addition to the well-documented problem of brain drain (Baruch et al. 2007; Cooper 2006; Khan and Bashar 2016) low-income and emerging economies in Africa have a new challenge related to harness-ing dispersed skills and abilities (Epstein and Heizler-Cohen 2016). Sahoo and Patnaik (2010) explained that as the skills and abilities become highly dispersed in the world today, locating them through greater networking across the globe brings economic advantages to any institution.
This places diaspora networks at the centre of the debate focussing on how they can be understood and utilised to benefit low-income and emerging economies in Africa, in particular, to increase entrepreneur-ial activity often seen as vital for economic development (Bosma 2012; Kelley et al. 2011). This view was echoed in Nkongolo-Bakenda and Chrysostome (2013) who agreed that some practitioners and scholars are increasingly recognising the diaspora as an important factor of devel-opment in developing economies.
Much of the extant literature on entrepreneurship seems to acknow-ledge that entrepreneurship is a vehicle for prosperity, employment and productivity (Acs and Storey 2004; Baumol 1990; Fritsch and Storey 2014; Fritsch 2011). It is therefore unequivocal, for low-income and emerging economies in Africa that diaspora networks would seem to be a natural choice (Elo 2015 in Larimo 2015: 13–39). As migra-tion has continued to increase, understanding the dynamics of diaspo-ras and diaspora networks has become imperative (Elo 2014). Indeed, their ability to connect and produce resources, and to allow the flow of people, trade and capital between the COO and COR has significantly transformed the global business environment (Aliaga-Isla and Rialp 2013).
As much as diaspora networks are heralded as an economic driver with the potential to unlock entrepreneurship in low-income and emerging economies in Africa, mainstream literature on strong net-work connections (Granovetter 1992) highlights the idea of redundancy
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(Ahuja 2000) that impact on the quality of information flowing in net-works. Particularly, the flow and exchanges of social capital in networks characterised with strong ties often diminishes overtime (Granovetter 1985). Clearly, the configurations of diasporas in a diaspora network consisting of actors in the COO often leads to either positive or less-productive relationships.
Policy intervention, COO economic stability and availability of opportunities might be a catalyst for diasporas to consider their COO for their investments. The literature on immigration (e.g. IOM 2016) highlights that the majority of diasporas genuinely and willingly con-tribute to their COO (Safran 1991). Therefore, enabling policies to support their activities may further encourage them to do so. This will address some of the constraining factors Okpara and Wynn (2007) highlighted as inadequate laws and regulations, and corruption for example.
Theory Development Process
The Framework we propose conforms to Gerring’s (1999) crite-ria of depth which justifies the process of developing new theory. Gerring advises social science researchers to precisely show the borders between concepts and also efficiency of communication using theory. From that perspective, we demonstrated the grounded nature of our Framework through undertaking a review of the literature on diaspora networks. In doing so, we touched on social capital which denotes the resources embedded in diaspora networks linked to African countries. Furthermore, we debated other paradigms including: networks in gen-eral, diaspora policy development and diasporas as agents of increased entrepreneurial activity in a low-income or emerging economy found in Africa. Our utilisation of the concept of diaspora networks was enhanced by the opportunity to use the ‘bundle ’ features including entrepreneurial networks, structural and relational social capital, weak and strong ties in networks. This is consistent with Stinchcombe (1987) who advised that the greater the number of properties shared by a phe-nomenon in the extension the greater its depth.
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Diaspora Networks, Social Capital and Entrepreneurial Activity Conceptual Framework
The Framework below depicts diaspora networks as consisting of dis-persed individuals seeking opportunities in distant lands (Riddle et al. 2010). It advances the idea that migration from low-income and emerg-ing economies in Africa is primarily driven by political and economic pressures (IOM 2016) described as push and pull factors in Massey (1998). The literature acknowledges that the majority of these indi-viduals are skilled people who have the potential to provide essential resources we described as social capital for the purpose of this study. Because of the potential of these individuals the Framework instructs governments of most developing economies to seriously consider estab-lishing diaspora-related policies, to support diasporas to establish net-works comprising of local and other diasporas. In a way, this is intended to allow individuals to create heterogeneous and homophilous connec-tions thereby increasing access to resources that can be the cornerstone for entrepreneurship in Africa (Mönsted 1995).
This would, increase the density of connections while opening oppor-tunities for entrepreneurial individuals and firms in the COO (Hills et al. 1997). In addition to China and India, Jamaica is another exam-ple of a low-income country that has made significant inroads towards harnessing social capital embedded in diaspora networks (see Mullings 2011). In view of this, the Framework below illustrates that by recog-nising diaspora networks through policy development, the potential to increase entrepreneurial activity in low-income and emerging economies in Africa is increased. Indeed, creating a conducive environment for entrepreneurship at national-level benefits various stakeholder includ-ing; entrepreneurial firms, entrepreneurs and diasporas as they can take advantage of the social capital embedded in deliberately established net-works (Simba 2013).
As clearly demonstrated in the literature; trust and trustworthi-ness (De Wever et al. 2005) become essential components that enable the effective functioning of networks. Indeed, establishing trust, good-will and benevolence in networks (Blomqvist 1997; Simba 2013) can
6 Diaspora Networks: A Social Capital Source … 131
facilitate the flow of social capital and it is very vital in the entrepre-neurial process (Aldrich and Zimmer 1986). Enabling the flow of social capital in diaspora networks can stimulate entrepreneurial activity in low-income and emerging economies in Africa as illustrated in the Framework below. It therefore means that if diaspora networks are the key source for skills, knowledge and information it makes more sense to develop national-level policies to enable them to economically contrib-ute in low-income and emerging economies. This brings diaspora net-works directly into consideration as major driver of business enterprise and economic activity in most of these countries in the Global South (Fig. 6.1).
The Framework we propose is an instructive and effective taxonomy for individuals, government and public institutions particularly in Africa. It provides knowledge concerning a new phenomenon in inter-national business.
More importantly, it informs policy-makers in many low-income and emerging economies around the world about the need to formu-late effective strategies to channel social capital towards benefitting their fragmented economies. This can be achieved by developing structures using the above Framework as the foundation. Furthermore, academ-ics can also benefit from the newly developed theory by understanding diaspora networks in business.
EntrepreneurialFirms
Increased entrepreneurial activity in low-income and
emerging economies in AfricaSocial capitalDiaspora
networks
Diaspora policy
Entrepreneurs & Diasporas
International migration
Fig. 6.1 Diaspora networks, social capital and increased entrepreneurial activity Framework
132 A. Simba and N. Ojong
Conclusion
The main contributions the chapter makes are theoretical. Firstly, we offered theoretical suppositions to comprehend the core functions of diaspora networks and particularly how they influence entrepreneur-ship in low-income and emerging economies found in the African continent. Secondly, we presented a new Framework to inform policy-makers including government and private institutions, about the essence of establishing favourable policies to harness the social capital diaspora networks generate. In order to capitalise on the social capital embedded in diaspora networks we also highlighted that policy-makers in low-income and emerging economies found in Africa should pri-oritise formulating policies that recognise the existence of their activi-ties. Doing so was seen as a key developmental step for enabling the flow of rich information, useful skills, essential knowledge and the much-needed financial resources into most low-income and emerging economies. Clearly, diaspora networks can be of particular significance to entrepreneurial activity in low-income and emerging economies in Africa given that institutions that facilitate the creation and growth of new ventures are either weak or totally missing (Nanda and Khanna 2010).
The implications of the issues raised in this study are manifold. Firstly, government institutions in most African countries have to make significant resource investments to establish productive links with dias-poras. It is however worth pointing out that, as much as this chapter has portrayed diaspora networks as the solutions for unlocking the entre-preneurship paradox in low-income and emerging economies located in Africa through social capital, their configurations (Ahuja 2000; Granovetter 1992) may impact their efficiency, consequently affecting the quality and information in-flows. To reduce this effect, it may mean that policy makers in most African countries need to seriously consider creating a balanced system in their countries to accommodate diaspora networks without sacrificing their abilities to do so.
Secondly, harnessing the skills and knowledge so dispersed world-wide brings intractable challenges for government and private
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institutions including identifying and convincing diasporas of the ben-efits of considering investing in their COO. More must be done to improve business conditions in their countries. Doing so will help in improving trust, benevolence and trustworthy (Blomqvist 1997; Simba 2013) among diasporas. Thirdly, some of the main factors to be con-sidered for establishing positive business conditions for diaspora net-works to flourish include: eradicating corruption, developing adequate laws and regulations, improving management and developing infra-structure. Changing current business practices in low-income countries would require due diligence. Otherwise making rapid and revolutionary changes to pave way for diasporas and their connections to operate may pose intractable challenges.
Finally, diaspora networks have the potential to support entre-preneurship by providing access to social capital. To further advance research on diaspora networks we recommend studies that identify dias-pora ventures in low-income and emerging in Africa to evaluate the challenges they have encountered is setting up their enterprises. Such studies will further enlighten policy-makers on the specific strategies that reduce the burden on diasporas of establishing a venture in their COO.
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